Distribution Channels

By binu kuriachan

Changing Banking Paradigm

Growing Importance of Channels
Channels of Future
Making the Channels Deliver
Challenges
In Conclusion

Changing Banking Paradigm

Growing Importance of Channels
Channels of Future
Making the Channels Deliver
Challenges
In Conclusion

Market Realities In Past

In

past,

Regulatory

Market
Realities

restrictions helped keep

competition at bay
Proximity to potential customers was
the key competitive advantage
Customers were satisfied with one
branch and restrictive timings
Easy comparison of products & services
was not possible

New Banking Paradigm

Bank
Customer
Anywhere

Anytime Anyway customer convenience

Online banking
24/7 service
8 to 8 branch service
365 days branch service
Instant comparison of products and services
Reduced Turn Around Time
Enriched interactivity through customized services

New Banking Paradigm

Customer
Bank
Redefine
Traditional concepts
Role of the branch
Wider and more focused market reach
Reduced distribution costs
Leverage customer database
Customer acquisition / retention
Credit screening and data mining

Changing Banking Paradigm

Growing Importance of Channels
Channels of Future
Making the Channels Deliver
Challenges
In Conclusion

Growing importance of
channels

Development
of Alternate
Channels is
Important to

Reach

out to new customers

Reach

out to remote geographies

Improve

our existing offerings by

providing faster processing through
cost effective solutions

Deliver
Data

new products

collection and mining

Extended Reach by Multi-channel

Offerings

Multi-channel delivery
model
m-Banking

Agent
Network

Call centre
Internet
Bank

ATM
Network

Branch
Network

Push & pull strategy

Larger deposit
market share
with fewer
branches
Freeing branch
resources for
cross-selling
and
non-routine
servicing

Central & Regional

Processing Hubs

Redefining Concept of Reach @ ICICI

Reach @ ICICI
Bank

ICICI redefined the meaning of reach

Transaction banking
Anywhere, Anytime banking
Pioneered electronic channels
Retail finance
Offer home delivery of loans
Created an infrastructure of
Branches
- 564
ATMs
- 1950
Call centre
- 2948 seats
Delivery Channels *
- 4396
Feet on street
- 39338
Manufacturer tie-ups
- 90

* Delivery Channels defined as the number of DMA, Dealers

and other product delivery channels for retail assets

Transforming channel usage

Channel

Share of
transactions in
March 2009

Share of
transactions in
March 2012

Branches

94%

22%

ATMs

3%

38%

Internet & mobile

2%

30%

Call centre

1%

10%

scaling up to handle rapid volume

growth

Changing Banking Paradigm

Growing Importance of Channels
Channels of Future
Making the Channels Deliver

Challenges
In Conclusion

Mobile Financial Services

High speed, User Friendly
Features
Complete Financial status information
like account balance, transaction
history, stock quotes, etc. and
processes requests like stop cheque,
etc.
Small
denomination
executed instantly

transactions

Applications
Useful for small transactions in places
like petrol pumps, toll booths, etc.
Mobile to mobile payments

Octroi Cards
Specific and Secure

Features
Closed user group card that allows
transfer only with select merchants

Octroi Card

In use at Ahmedabad Municipal

Corporation for Octroi collections
Applications
Used by transport agencies for
paying octroi. Ensures that there is no
misuse
Could be combined with other cards
for multi-service usage

Stored Value Card

Offline, low risk, low cost
Features
Prepaid cash card with value stored
in the card

Ability to recharge
Eliminates cash replenishment

Applications
Travel cards
Public Transportation

Enhanced POS Usage

Features

Banking Transactions
Balance Enquiry
Cash Withdrawal
Cash Deposit
Utility payment
Proprietary payment devices PCs/Cash
Registers
Applications

Wide
reach
transactions

to

provide

Increased customer convenience

financial

Agri-Business Kiosks
Multipurpose, Cost Efficient, Wide Reach
Features
Wireless / telephone line based internet
access. Could be solar-based for India

Applications
Extend reach of our products to rural
customers in remote areas at low costs

Supplement by value-added services like

video-conferencing for loan disbursal,
online health checkup for insurance, etc.

Handheld Devices
Convenient, authentication, fast processing
Features
Storage as well as processing capabilities

Easy to carry and useful for offline

processing

Applications

Can be used by Agents to carry out

transactions on behalf of the users
Ideal
for
simple
processing
generating insurance illustrations
rural banking

like
and

Changing Banking Paradigm

Growing Importance of Channels
Channels of Future
Making the Channels Deliver

Challenges
In Conclusion

Creating superior channel network

Creating
Superior
Channel
Network

Foundation of creating superior channel is

superior insight into customer behaviour

Channel requirement for delivery of different

products vary with
Customer

Type

Customer

Behaviour

Customer

Profitability

Customer Centric Architecture

Multi-product view to the
customer across different
channels like Branches,
Web and Call Center

Consistent
identification of
the customer
across the
channels

Consistent view
across
channels

Offer customized
products and services

Channel Effectiveness

The channel should be readily available to

customers
Location

Availability

1950 ATMs spread across the country

for easy accessibility

Time

24X7 ATM access

24x7 Internet Banking access

Extended 8 to 8 branch access

Channel Effectiveness

Simplicity
Technology

should be simple and user-

friendly
Customer

Simplicity

should feel comfortable with the

technology

Simpler process for authentication and

Verification

Regional language ATMs

Channel Effectiveness

Expected service levels to be met at all times

Customer confidence must be built over a

period of time
When

ATMs were introduced managing

cash replenishment to ensure ready
availability of cash at any time was of
utmost importance

Reliability

Sizing systems for Peak load where the

difference between peak and lean periods can
widely vary

Channel Effectiveness

Customer

should not have conflicting

experiences across various channels

Consistency

Need

to provide integrated platform that

can accept information from various other
platforms used by various product groups
of the Bank

Channel Effectiveness
Channels

must continuously strive to add

greater value to customers in terms of
services

Valueadded
services

Mobile top-ups at ATMs

Benchmark

innovative products / services

across
the
world
to
add
newer
perspectives to electronic transactions
Card to Card funds transfer

Channel Effectiveness
Customer

education on

Channel

Customer
Education
and
Migration
Plan

potential

Channel

usage through hand-holding

for the initial period

Channel

migration plan

Clear

plan on migrating customers and

scale-up of new channel

Accordingly

incentivise customers to
shift to the newer channels

Channel Effectiveness
Continuous

improvement to remove
customer inconvenience

Avoiding
Inconvenience

Avoid

calls at odd hours

Avoid

mobile alerts at odd hours

Process

and systems improvements

for reducing prolonged wait times at
Phone Banking

Changing Banking Paradigm

Growing Importance of Channels

Channels of Future
Making the Channels Deliver
Challenges
In Conclusion

Challenges

Integration

Integration
across
channels

with back-end to deliver a onebank experience to the customer

Across

various channels

Across

various product lines

Challenges

Service
integration

Seamless

service integration between

the front-line (branches/ Phone Banking)
and back-office (Operations units)

Channel Integration
Product Systems

Internet
Banking

Banking

Branches

Credit Cards

Auto Loans

Home Loans

Channels

Middleware

ATMs
Cyber
Centers

Bonds

Call
Center

Web Trade

m-Banking
Agents

Customer

Challenges

Channel
placement

Complementary

placement of various
channels branches / ATMs to be
located judiciously to ensure maximum
coverage at minimum costs

Challenges
Managing

the logistics involved in

servicing the customers across the
various channels
Cash

Logistics

filling and replenishment across

1950 ATMs even at remote locations

Handling

drop-box requests at every

nook and corner of country

to 8 banking

Managing

huge
Banking seats

number

of

Phone

Challenges
Added

Trade off
between
security,
convenience
& cost

convenience Vs. compromise on

security or quality aspects

Latest

technologies and complex logics to

avoid fraud Vs. Simplicity and userfriendliness

Scale

Vs. Affordable cost

Challenges
Training

Employee
Training and
Customer
Education

of front-line staff manning all

service points across branches, Phone
Banking, sales force to handle customer
queries and service expectations

Educating

customers
multiple channel usage

to

encourage

Changing Banking Paradigm

Growing Importance of Channels

Channels of Future
Making the Channels Deliver
Challenges
In Conclusion

In Conclusion

Multi-channel

Recipe to
Develop
Successful
Channel

is now a reality

Potential

for further introduction of

new channel types

Each

new channel should add value

both to Bank and to Customer

Each

new channel
economic sense

should

make

In Conclusion
Understand

customers
transaction
behavior and underlying attitude

Use

Recipe to
Develop
Successful
Channel

ability of e-channels to attract new

customers and create differentiation in
market

Do

not lose focus from personalized

interactions to counteract decreased
loyalty among remote customers

Assess

and review channel migration

strategy on an ongoing basis

Channel Delivery scorecard

Ability to Drive Satisfaction

Zone of Competitive
Opportunity
Personalization
Relationship
Mapping

Courtesy
Aesthetics

Basic Functions

Efficiency
Zone

Competence
(Products & Service)

Zone of Competitive
Intensity

Ease of use and simplified

access
Simplified Account
Aggregation Service

Quick Support

Accessibility

Responsiveness

Zone of Competitive
Necessity

Other' Channel Access

Real Time - transactions
Availability Uptime
Speed

Security
Reliability
Accuracy

Strategic
Focus

Thank You